Financial Alchemy in Crisis: The Great Liquidity Illusion

Paper $35.00ISBN: 9780745328775
Published
July 2010
For Sale in All Americas and the Caribbean except Canada

Cloth $99.00ISBN: 9780745328782
Published
July 2010
For Sale in All Americas and the Caribbean except Canada

In July 2007, the combination of a seemingly unstoppable rise in house prices and bullish banks swimming in liquidity meant that almost anyone could get a mortgage in the UK or US. Little more than a month later the supply of credit dried up practically overnight, leaving the world wondering how bank liquidity could suddenly vanish.

In Financial Alchemy, Anastasia Nesvetailova shows that this liquidity never actually existed. The rise of sophisticated financial instruments created what appeared to be an abundance of liquid funds but was in fact a credit pyramid. As soon as house prices stopped rising the reality was exposed.

Nesvetailova’s bold and radical analysis explains why the credit crisis was an inevitable consequence of entrusting the world economy to financiers who believe that they can ’create’ money and wealth.

Introduction. The End of a Great Illusion1 The Stages of the Meltdown2 The Tale of Northern Rock: Between Financial Innovation and Fraud (Anastasia Nesvetailova and Ronen Palan)3 How the Crisis Has Been Understood 4 Some Uncomfortable Puzzles of the Credit Crunch 5 2002- 2007: The Three Pillars of Liquidity Illusion6 After the Meltdown: Re-Writing the Rules of Global Finance? Conclusion. A Very Mundane CrisisNotesIndex

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